£70m Kensa deal is ‘Britain’s biggest investment’ in ground source heat pumps

UK ground source heat pump manufacturer, The Kensa Group, is set to get a £70m investment as Octopus Energy’s generation arm partners with Legal & General Capital.

Octopus and Legal & General investment in ground source tech will drive down costs and kick start the sector.

Marking the biggest investment ever made in ground source tech in the UK, the move is expected to drive down installation costs and deliver rapid growth in the country’s heat pump industry.

It will allow Kensa to expand rapidly, with the group targeting 50,000 ground source heat pump installations a year by 2030 – almost 10% of the Government’s target of 600,000 heat pump installations a year by 2028.

Kensa expects its growth to create more than 7,000 green jobs in the UK by 2030.

Kick-starting the GSHP sector

Marking Octopus Energy’s entry into the GSHP market, the investment is the first deal from its new £500m Octopus Energy Transition Fund (OETF), which is currently raising capital from investors. To make GSHPs accessible to more properties, the investment will reduce their cost for use in retrofits such as social housing, terraced homes and non-domestic buildings.

New financing will enable Kensa to offer house builders, housing associations and operators of non-domestic buildings its ‘Networked Heat Pump’ systems at lower costs.

The Group describes this as ‘creating a new renewable energy asset class’ – kick-starting a sector that could exceed £1bn by 2030.

Dr Matthew Trewhella, CEO of The Kensa Group, said: “This is a monumental moment for ground source heat pumps. This investment will help unlock Kensa’s vision of a mass transition to low carbon heating by replacing the gas grid with its 21st-century equivalent – an ambient temperature heat network.

“Our approach harnesses the power of investment capital funding infrastructure, reduces the strain on our electricity grid and enables a just transition – keeping heating costs low and addressing fuel poverty simultaneously with climate change mitigation.

“We’re extremely proud to partner with Octopus Energy and Legal & General Capital who show incredible leadership in bringing about our low carbon energy future.

Turbocharging the clean energy shift

“The heat pump revolution is off to a flying start,” comments Zoisa North-Bond, CEO of Octopus Energy Generation. “It’s a tried and tested replacement for gas boilers and can drive down consumers’ energy bills for good.

“Backing Kensa will help rapidly expand Britain’s fast-growing ground source heat pump economy. This is a huge milestone for our exciting new energy transition fund, as we invest in ambitious companies rolling out tech to turbocharge the clean energy shift.”

John Bromley, managing director – Clean Energy, at Legal & General Capital, said: “Legal & General Capital first partnered with Kensa in April 2020 with the shared aim of scaling up the deployment of ground source heat pumps in the UK through their long-term solution that is highly efficient and reliable.

“Since our initial investment, they have grown quickly, opening a new factory and delivering some prestigious new-build and retrofit installations across the UK.

“We are delighted to make our third significant investment in Kensa, together with Octopus Energy, recognising the significant role Kensa can play in reducing UK dependence on natural gas through a transition to low-carbon heating.”

The investment, which is subject to applicable regulatory approval, is expected to complete in the third quarter of 2023.

Image shows CEO Dr. Matthew Trewhella and COO James Standley of The Kensa Group